Dedicated, even coordinated, effort will be required in order to emerge from the past year’s difficulties and resume our path forward.
2020 is finally behind us. Coronavirus vaccinations are being administered. Capital is waiting on the sidelines. And as with any change in presidency, post-inauguration, the new administration and Congress are getting down to business. Economic recovery won’t come immediately, but as the health-care picture grows more promising, economists are predicting improvement later this year.
With this improvement comes possibilities for better commercial and multifamily real estate performance: Simple possibilities such as the return of commercial tenants, renewed interest in urban living, increased comfort with travel and sidelined capital jumping back into the investment game. More complex possibilities such as resolution of back rent payments, revisions to office usage and implementation of new safety protocols. Policy possibilities such as expansion of affordable housing tax credits, evaluation of Opportunity Zone benefits and refinements, clean energy credits and infrastructure investment.
Such circumstances would stimulate growth, particularly in gateway markets, which have been the most impacted as people have sought to avoid the close interactions and higher expenses of major cities. On the other hand, the pandemic-induced exacerbation of both corporate and individual movement to secondary and tertiary markets has been a boon for an array of Sun Belt and other cities.
Of course, many questions still need to be resolved. Will companies generally require less office space going forward as they rebalance work from office against work from home, or more space in order to achieve distance between workstations? How will they balance urban vs. suburban locations? Will there be a greater need for last-mile fulfillment centers? On the multifamily side, how long will apartment eviction moratoriums be extended, and how will that impact the amount renters will owe? And how much will further relief address landlord and resident costs?
Right now, it seems like there are more questions than answers. And with vaccinations likely to take several more months, it will be awhile before patterns emerge. As for the policy possibilities, coronavirus relief measures are necessarily taking precedence over other issues, including real estate concerns.
In the meantime, the real estate industry can begin to address the clearest shifts in trends. The new year brings promise. But it will require some dedicated, even coordinated, effort to address the needs of property owners, investors and occupants so we can emerge from the past year’s difficulties and resume our path forward. I hope the insights on the following pages help determine the right direction.